Having drawn from the expertise of the Atradius Collections' local offices, the International Debt Collections Handbook explains the different stages, regulations and procedures for the UK.
Our collectors try to collect the debt without recourse to legal action by telephone and letters. We always try to obtain payment of the debt in full but will negotiate to agree a payment plan or a settlement figure. In order to support this process in the UK, we must issue a letter before claim, which is the start of the legal process. This is not used in all cases, only those when the collector considers that the debtor has the ability to pay and needs some strong evidence of our intentions. In England and Wales, we can issue a copy of the proceedings that will be sent to the court in the event that the debtor fails to make payment. When there is a dispute, we aim to reach an amicable solution between the creditor and debtor. We do this by analysing all contractual documents (e.g. signed contracts, orders, confirmations, invoices and delivery notes, as well as standard terms previously agreed upon). All investigations are completed with the assistance and agreement of our legal team.
Late Payment of Interest Act
This act sets out to assist businesses faced with late payment problems. It does this by adding a number of rules to contracts between businesses. It is important to realise that this legislation only applies to commercial debt. It does not apply when one of the parties is not acting as a business; for example, sales to a private individual / consumer. The debt should be one that has arisen in the course of business. Both parties should be businesses, commercial entities or public sector organisations. Interest is claimed at the prevailing Bank of England rate – currently at 0.5% plus 8%. The rate is listed as the UK clearing bank base lending rate in the Financial Times and is also known as the repo rate. The rate that applies is the rate in force at the end of the day that the payment was due.
As well as interest, the supplier may also charge an amount to compensate for the costs of collecting late payments. The amount of compensation that can be claimed is determined by the amount outstanding as follows:
Changes made under the Late Payment of Commercial Debts Regulations 2013 (Regulations) with effect from the 16th March 2013.
A supplier over and above the listed compensation costs may also claim any “reasonable costs“ incurred in recovering the debt as compensation.
The Debt Collections Handbook presents a snapshot of the UK's local economic situation and covers the following topics:
- Accepted and most common payment methods
- Types of companies
- Legal procedures & legal system
- Insolvency proceedings
- Enforcement in debt, movable and immovable goods
- Debt collections in Scotland
To read more about steps and procedures undertaken in the field of debt collection: